New European plans requiring additional authentication at online checkout will lead to a longer and more complicated eCommerce experience, warns Visa.
The payments company claimed over half of shoppers will abandon their purchases when the European Banking Authority brings in its proposals to implement Strong Customer Authentication (SCA).
The EU plans will enforce every transaction over €10 to require additional security checks, such as entering passwords, codes or using a card reader. This would bring an end to express online checkouts, such as one-click ordering and reduced access to eCommerce sites outside of Europe as these non-European websites would also have to follow the new rules.
Research, conducted independently on behalf of Visa, concluded 95% of European shoppers spend over €10 online. According to Visa, the changes will potentially impact €6 billion of transactions across Europe, with concerns this would lead to basket abandonment as over half of UK consumers said they would abandon purchases if more steps were added to the checkout.
"These new proposals threaten to seriously disrupt the way we all shop. The plans will bring a host of complications and inconveniences including more declined transactions and longer and more complicated checkout experiences with little if any benefit to consumers," said Peter Bayley, chief risk officer, Europe at Visa.
“Managing payments is always about balancing security and convenience. If you tip the balance too far one way, you end up making it either too difficult or too risky for consumers to make purchases wherever, whenever and on whatever device they want. Either way it annoys consumers and damages businesses’ potential to sell their goods and services."
The UK would suffer the most, being the most prolific online shoppers in Europe – 63% regularly shop online, compared with the European average of 51%.
Bayley added: "All of this inconvenience comes with no evidence that it will actually reduce fraud. We have a system today that works, what we call risk-based authentication. This enables intelligent decisions about whether a particular purchase is low risk taking into account things like the device that’s being used and previous shopping patterns," he said.
"Fraud on Visa cards today is low, tracking at less than 5 cents in every €100 spent. And consumers are protected from fraud losses anyway – all the risk is taken by the merchants and banks. They are prepared to accept that risk to give a seamless experience to their customers as they know this makes sales more likely and it’s what people now expect."